Over the past month, COVID-19 cases in Canada have skyrocketed. It doesn’t appear like the end of this pandemic is anywhere in sight. As a result, provincial governments are bringing back certain lockdown restrictions. In Ontario, gathering limits have returned, capacity limits are now in action, and many closures have been announced. Currently, it’s estimated that these restrictions will only be in effect until the end of the month. However, like previous lockdowns, we shouldn’t count out the possibility of an extension.
If there’s another prolonged lockdown, stocks will surely be affected. In that case, what should investors do?
Invest in companies that can perform well under lockdown conditions
In 2020, companies that performed well under lockdown conditions saw significant increases in value. For instance, companies that allowed businesses to operate remotely and those that allowed consumers to purchase goods for their everyday lives were major stock market winners. If this current lockdown extends into next month, I believe investors should follow that same strategy.
One stock that did very well in 2020 was Docebo (TSX:DCBO)(NASDAQ:DCBO). The company provides a cloud-based and AI-powered eLearning platform to enterprises. Using its platform, managers can assign, monitor, and modify training exercises more easily. Docebo is a smaller company; however, it has already managed to attract more than 2,000 customers, which include the likes of Amazon. Docebo has also secured an integration into the Salesforce ecosystem, allowing businesses to streamline the LMS and CRM processes.
Docebo is currently valued around $2 billion. If it can continue to grow and become a large-cap stock, investors would see a five-fold return. Of course, that’s no easy task. However, Docebo remains a top growth stock with the right conditions for growth.
This stock will grow even without more lockdowns
Because businesses have been forced to lock down numerous times over the past two years, consumers have become accustomed to making purchases online. This was very evident in 2020, when e-commerce sales skyrocketed around the world. In Canada, online retail accounted for about 11% of all retail sales in 2020. The year prior, online sales only accounted for about 4% of the entire Canadian retail industry.
Shopify (TSX:SHOP)(NYSE:SHOP) is a company that has helped increase e-commerce’s penetration of the broader retail industry. It provides merchants with a platform and all the tools necessary to operate online stores. In the United States, it’s estimated that about a third of all e-commerce websites used Shopify to power their businesses.
What makes Shopify interesting is that it has more than one way to grow. The first way Shopify can grow is by expanding its reach within the retail space. It does this by attracting new businesses to its platform and by enlarging its partnership network. In 2021, Shopify managed to make headlines in both respects. It announced that Netflix had chosen Shopify to power its official merchandise store. Shopify also announced a partnership with Spotify that allows artists to sell merchandise directly from the audio-streaming platform.
The second way Shopify can grow is by upselling to its current customers. Shopify offers many subscription options at different price points. This allows merchants to choose an option that’s more suitable for them, and leaves the option open to jump to more expensive packages as they achieve success. Shopify shows in its earnings reports that its annual cohorts are continuing to achieve greater sales numbers year after year. Further lockdowns will help Shopify, but it can grow much bigger, even without them.
